united states bankruptcy court southern district …tri-point oil & gas production systems, llc...

1 10453397v5

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re:

TRI-POINT OIL & GAS PRODUCTION SYSTEMS, LLC, et al.,

Debtors.1

§§§§§§§

Chapter 11

Case No. 20-31777 (DRJ)

(Joint Administration Pending) (Emergency Hearing Requested)

DEBTORS’ EMERGENCY MOTION (I) TO SELL CERTAIN REAL PROPERTY FREE AND CLEAR OF LIENS, CLAIMS, AND ENCUMBRANCES, (II) TO AUTHORIZE

THE ASSUMPTION OF CERTAIN ENGAGEMENT AGREEMENTS, (III) TO AUTHORIZE PAYMENT OF TRANSACTION FEES AT CLOSING, AND

(IV) FOR RELATED RELIEF

EMERGENCY RELIEF HAS BEEN REQUESTED. A HEARING WILL BE CONDUCTED ON THIS MATTER ON MARCH 18, 2020 AT 2:30 P.M. IN COURTROOM 400, 4TH FLOOR, 515 RUSK STREET, HOUSTON, TEXAS 77002. IF YOU OBJECT TO THE RELIEF REQUESTED OR YOU BELIEVE THAT EMERGENCY CONSIDERATION IS NOT WARRANTED, YOU MUST EITHER APPEAR AT THE HEARING OR FILE A WRITTEN RESPONSE PRIOR TO THE HEARING. OTHERWISE, THE COURT MAY TREAT THE PLEADING AS UNOPPOSED AND GRANT THE RELIEF REQUESTED.

RELIEF IS REQUESTED NOT LATER THAN MARCH 18, 2020.

Tri-Point Oil & Gas Production Systems, LLC (“Tri-Point”) and certain of its affiliates, as

debtors and debtors in possession in the above captioned cases (collectively, the “Debtors”) file

this Emergency Motion (i) to Sell Certain Real Property Free and Clear of Liens, Claims, and

Encumbrances, (ii) to Authorize the Assumption of Certain Engagement Agreements, (iii) to

Authorize the Payment of Transaction Fees at Closing, and (iv) for Related Relief (the “Motion”).

In support of the Motion, the Debtors rely upon and incorporate by reference the Declaration of

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are as follows: Tri-Point Oil & Gas Production Systems, LLC (2419); FR Tri-Point, LLC (3967), Tri-Point Services GP, LLC (5463), and Tri-Point Services, LLC (0783). The address of the Debtors’ headquarters is: 5555 San Felipe, Suite 1250, Houston, Texas 77056.

Case 20-31777 Document 19 Filed in TXSB on 03/17/20 of 14Docket #19 Date Filed: 03/17/2020

2 10453397v5

Jeffrey Martini in Support of Chapter 11 Petitions and First Day Pleadings (the “First Day

Declaration”), filed with the Court concurrently with this motion.

EMERGENCY CONSIDERATION

1. The Debtors request emergency consideration of this Motion because the Auctions

(as defined below) for the Debtors’ Oklahoma Property and Texas Property (each as defined

below, and collectively, the “Properties”) are scheduled to open on March 23, 2020 and close on

March 25, 2020. The Debtors believe they will receive the highest and best offer for the Properties

through the previously scheduled Auctions, which dates have been publicized for weeks prior to

the petition date. Accordingly, in order to ensure that the Auctions are able to proceed on March

23, 2020, along with the closing of the sales of the Properties, the Debtors request emergency

consideration of this Motion.

JURISDICTION AND VENUE

2. This Court has jurisdiction over this case pursuant to 28 U.S.C. § 1334. This is a

core proceeding under 28 U.S.C. § 157(b)(2)(N). Venue is proper before this Court pursuant to 28

U.S.C. § 1408.

3. The statutory bases for relief are sections 328, 363 and 365 of title 11 of the United

States Bankruptcy Code (the “Bankruptcy Code”), Rules 6004 and 6006 of the Federal Rules of

Bankruptcy Procedure (the “Bankruptcy Rules”), and Rule 9013-1(i) of the Bankruptcy Local

Rules of the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy

Local Rules”).

Case 20-31777 Document 19 Filed in TXSB on 03/17/20 of 14

3 10453397v5

BACKGROUND

General Background

4. On March 16, 2020 (the “Petition Date”), the Debtors each filed a voluntary petition

for relief under chapter 11 of the Bankruptcy Code (collectively, the “Chapter 11 Cases”).

5. The Debtors continue to operate their businesses and manage their properties as

debtors and debtors in possession pursuant to Bankruptcy Code sections 1107(a) and 1108.

6. To date, no creditors’ committee has been appointed in the Chapter 11 Cases by the

Office of the United States Trustee for the Southern District of Texas (the “U.S. Trustee”). No

trustee or examiner has been appointed in the Chapter 11 Cases.

7. The Debtors are a provider of oil and gas production and processing equipment and

services headquartered in Houston, Texas with operations in the Permian, Mid-Con and Rockies

regions. The Debtors’ services include engineering and design, manufacturing, installation, start-

up, rentals, refurbishment and after-market field maintenance. The Debtors filed these Chapter 11

Cases to facilitate the sale of their assets as a going concern.

8. Additional information regarding the Debtors and the Chapter 11 Cases, including

the Debtors’ business operations, capital structure, financial condition, and the reasons for and

objectives of the Chapter 11 Cases, is set forth in the First Day Declaration, filed

contemporaneously with this Motion.

Specific Background

9. Prior to the Petition Date, the Debtors were in the process of liquidating two

properties: one property, including certain machinery and equipment located on the property,2 is

2 The machinery and equipment includes, but is not limited to, an overhead crane, a tube heater, a paint booth, two air compressors, a fiberglass thickness gauge, and a forklift, all of which are included in auction and sale of the property located at 1703 S. Main Street, Elk City, Oklahoma 73644.


4 10453397v5

located at 1703 S. Main Street, Elk City, Oklahoma 73644 (the real property, machinery and

equipment together, the “Oklahoma Property”) and the other property, including certain machinery

and equipment located on the property,3 is located at 10978 Exhibition Center Road, Canadian,

Texas 79014 (the real property, machinery and equipment together, the “Texas Property”). The

Oklahoma Property is a 38,400 square foot industrial project, and the Texas Property is a 12,579

square foot industrial project. The Debtors no longer conduct operations out of the Properties.

10. On January 15, 2019, Tri-Point executed an Exclusive Sales Listing Agreement (the

“Oklahoma Listing Agreement”) with Newmark Real Estate of Houston, LLC, d/b/a Newmark

Knight Frank (the “Broker”), granting the Broker the exclusive right to list for sale the Oklahoma

Property for a period commencing January 1, 2019 and ending midnight December 31, 2019 (the

“Oklahoma Term”). The Broker listed the Oklahoma Property for auction with Ten-X, Inc. (“Ten-

X”), an online platform for commercial real estate auctions. The Ten-X auction will open on March

23, 2020 and close March 25, 2020 (the “Oklahoma Auction”).

11. Under the Oklahoma Listing Agreement, Tri-Point agreed to pay the Broker a sales

commission of 5% of the gross purchase price of the Oklahoma Property (the “Oklahoma Sale

Commission”). The Oklahoma Listing Agreement authorizes the Broker to deduct the Oklahoma

Sale Commission from any deposits, payments or other funds, including proceeds of sale, paid by

a purchaser of the Oklahoma Property. The Oklahoma Sales Commission is earned if, during the

Oklahoma Term, the Oklahoma Property is sold to a purchaser not affiliated with Tri-Point or if

within 120 calendar days after the expiration or termination of the Oklahoma Term, the Oklahoma

Property is sold to, or Tri-Point enters into a contract of sale of the Oklahoma Property with, or

3 The machinery and equipment includes, but is not limited to, a forklift engine repair, several welders, a pattern torch, an air compressor, a plasma cutter, a 6,000 lbs C-Roll, a storage container, a paint sprayer and paint booth, and certain IT equipment, all of which are included in auction and sale of the property located at 10978 Exhibition Center Road, Canadian, Texas 79014.


5 10453397v5

negotiations continue, resume or commence and thereafter continue leading to a sale of the

Oklahoma Property to any person or entity with whom the Broker has negotiated or to whom the

Oklahoma Property was submitted during the Oklahoma Term.

12. On December 2, 2019, Tri-Point entered into a second Exclusive Sales Listing

Agreement (the “Texas Listing Agreement”) with the Broker, granting the Broker the exclusive

right to list for sale the Texas Property for a period commencing December 1, 2019 and ending

midnight November 30, 2020 (the “Texas Term”). The Broker listed the Texas Property for

auction with Ten-X. The auction will open on March 23, 2020 and close on March 25, 2020 (the

“Texas Auction,” and collectively with the Oklahoma Auction, the “Auctions”).

13. The Texas Listing Agreement provides that Tri-Point will pay the Broker a sales

commission of 6% of the gross purchase price of the Texas Property (the “Texas Sale

Commission”). The Texas Listing Agreement authorizes the Broker to deduct the Texas Sale

Commission from any deposits, payments or other funds, including proceeds of sale, paid by a

purchaser of the Texas Property. The Texas Sales Commission is earned if, during the Texas

Term, the Texas Property is sold to a purchaser not affiliated with Tri-Point or if within 120

calendar days after the expiration or termination of the Texas Term, the Texas Property is sold to,

or Tri-Point enters into a contract of sale of the Texas Property with, or negotiations continue,

resume or commence and thereafter continue leading to a sale of the Texas Property to any person

or entity with whom the Broker has negotiated or to whom the Texas Property was submitted

during the Texas Term.

14. On January 20, 2020, Tri-Point entered into two marketing agreements with Ten-

X under which Ten-X agreed to advertise, market and promote the sale of the Oklahoma Property

and the Texas Property. The Ten-X marketing agreement for the Oklahoma Property (the


6 10453397v5

“Oklahoma Marketing Agreement”) provides for a transaction fee of 5% of the buyer’s offer price

paid at closing, but in no event less than $40,000.00 (the “Oklahoma Marketing Fees”). The Ten-

X marketing agreement for the Texas Property (the “Texas Marketing Agreement” and collectively

with the Oklahoma Marketing Agreement, the Oklahoma Listing Agreement and the Texas Listing

Agreement, the “Engagement Agreements”) provides for a transaction fee of 5% of the buyer’s

offer price paid at closing, but in no event less than $20,000.00 (the “Texas Marketing Fees,” and

collectively with the Oklahoma Marketing Fees, the Texas Sale Commission and the Oklahoma

Sale Commission, the “Transaction Fees”). The Texas Marketing Fees and the Oklahoma

Marketing Fees are added to the each buyer’s offer price for the respective property to establish

the total purchase price payable by the buyer and the fees are payable out of the proceeds of the

Auctions.

15. The Auctions will open on or about March 23, 2020 and close on or about March

25, 2020. The starting bid for the Oklahoma Property is $250,000.00 and the starting bid for the

Texas Property is $50,000.00. The Oklahoma Marketing Agreement and the Texas Marketing

Agreement provide that the purchase agreement to be used in both sales (the “Sales”) is Ten-X’s

form purchase and sale agreement, with Tri-Point’s addendum (the “PSA”), which is attached

hereto as Exhibit A.

RELIEF REQUESTED

16. The Debtors respectfully request entry of an order by the Court that:

i. Authorizes the Auctions and Sales of the Properties free and clear of all liens, claims, and encumbrances pursuant to section 363 of the Bankruptcy Code;

ii. Approves the assumption of the Engagement Agreements pursuant to section 365 of the Bankruptcy Code; and

iii. Authorizes the payment of the Oklahoma Sale Commission and Oklahoma Marketing fees upon closing of the sale of the Oklahoma Property and the


7 10453397v5

payment of the Texas Sale Commission and Texas Marketing Fees upon closing of the sale of the Texas Property;

17. Wells Fargo Bank, N.A., (“Wells Fargo”) the Debtors’ prepetition administrative

agent under the Debtors’ prepetition revolving credit facility and DIP Lender consents to the relief

requested.

BASIS FOR RELIEF

A. The Auctions and Sales of the Properties are an Exercise of the Debtors’ Sound Business Judgment.

18. The Debtors seek approval of the Auctions and Sales of the Properties in

accordance with the PSAs and pursuant to section 363(b) of the Bankruptcy Code. Section 363(b)

of the Bankruptcy Code provides that a debtor, “after notice and a hearing, may use, sell, or lease,

other than in the ordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(1).

19. Section 363(b) does not specify a standard for determining when it is appropriate

for a court to authorize the use, sale, or lease of property of the estate. However, bankruptcy courts

have required that the authorization of such use, sale, or lease of property of the estate out of the

ordinary course of business be based upon sound business justification. See Institutional Creds.

of Continental Air Lines, Inc. v. Continental Air Lines, Inc., et al. (In re Continental Air Lines,

Inc.), 780 F.2d 1223, 1226 (5th Cir. 1986) (“[F]or a debtor-in-possession or trustee to satisfy its

fiduciary duty to the debtor, creditors and equity holders, there must be some articulated business

justification for using, selling, or leasing the property outside the ordinary course of business”); In

re Asarco, 650 F.3d 593, 601 (5th Cir. 2001); In re Cowin, No. 13-30984, 2014 WL 1168714, at

*38 (Bankr. S.D. Tex. Mar. 21, 2014). Once the Debtors articulate a valid business justification,

“[t]he business judgment rule is a presumption that in making the business decision the directors

of a corporation acted on an informed basis, in good faith and in the honest belief that the action

was in the best interests of the company.” In re S.N.A. Nut Co., 86 B.R. 98 (Bankr. N.D. Ill. 1995);


8 10453397v5

see In re Integrated Res., Inc., 147 B.R. 650, 656 (Bankr. S.D.N.Y. 1992); In re Johns-Manville

Corp., 60 B.R. 612, 615–16 (Bankr. S.D.N.Y. 1986) (“. . . a presumption of reasonableness

attaches to a Debtor’s management decisions.”).

20. Because the Debtors no longer conduct operations out of the Properties, retaining

them would be a burden on the Debtors’ estates. Prepetition, the Debtors engaged the Broker and

Ten-X to conduct the listing, marketing, auction, and sale process for the Properties. The Broker

listed the Properties for auction with Ten-X, which is currently marketing the Properties for sale

on the previously published auction dates. The Auctions are the most efficient way to maximize

the value of the Properties to the Debtors’ estates and therefore constitutes a sound business

justification. The marketing, auction, and sale process is already very advanced and it would

constitute a waste of estate resources if the Debtors were unable to move forward with the Auctions

and Sales. The Debtors, therefore, believe that the proposed auction and sale process will obtain

the highest and best offer for the Properties for the benefit of the Debtors’ estates and their

creditors. The Debtors accordingly seek approval of the Auctions and Sales of the Properties.

B. The Court May Authorize the Sales Free and Clear of All Liens, Claims, and Encumbrances.

21. The Debtors submit that the Court may authorize the sale of the Properties free and

clear of all liens, claims, and encumbrances.

22. Section 363(f) allows the Debtors to sell the Properties free and clear of any interest

in the Properties if:

(1) applicable nonbankruptcy law permits sale of such property free and clear of such interest; (2) such entity consents; (3) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property; (4) such interest is in a bona fide dispute; or


9 10453397v5

(5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.

11 U.S.C. § 363(f).

23. The Debtors maintain that section 363(f)(2) has been satisfied and, therefore, the

Debtors may sell the Properties free and clear of all liens, claims, and encumbrances, with Wells

Fargo’s liens attaching to the proceeds of the Sales. Wells Fargo consents to the sale. The Debtors

are not aware of any other party asserting liens on the Properties. To the extent any such lien

exists, the Debtors submit that any such lien, claim, or encumbrance will be adequately protected

by attachment to the net proceeds of the sale of the respective property to which such lien is

attached, subject to any claims and defenses the Debtors may possess with respect thereto and/or

the Debtors will obtain the consent of the party holding the lien, claim or encumbrance.

Accordingly, the Debtors request that the Oklahoma Property and the Texas Property be sold to

the prevailing bidder in each respective auction free and clear of all liens, claims, and

encumbrances, with such liens, claims, and encumbrances attaching to the proceeds of the sale of

the respective property to which such liens, claims, and encumbrances are attached.

C. The Assumption of the Engagement Agreements is an Exercise of Sound Business Judgment.

24. The Debtors seek authorization to assume the Engagement Agreements pursuant to

section 365 of the Bankruptcy Code. Section 365(a) of the Bankruptcy Code authorizes a debtor

to assume or reject an executory contract subject to the approval of the bankruptcy court:

(a) Except as provided in . . . subsection (b), (c) and (d) of this section, the trustee, subject to the court’s approval, may assume or reject any executory contract or unexpired lease of the debtor.

11 U.S.C. § 365(a).


10 10453397v5

25. A debtor may assume an executory contract if (a) outstanding defaults under the

contract have been cured under section 365(b)(1) of the Bankruptcy Code, and (b) the debtor’s

decision to assume the executory contract is supported by valid business justifications, which

involves showing that the assumption is advantageous to the estate and based on sound business

judgment. See In re Pisces Energy, LLC, No. 09-36591-H5-11 (KKB), 2009 Bankr. LEXIS 4709,

at *18 (Bankr. S.D. Tex. Dec. 21, 2009) (citing Lubrizol Enters., Inc. v. Richmond Metal Finishers,

Inc., 756 F.2d 1043, 1046–47 (4th Cir. 1985)); see also Richmond Leasing Co. v. Capital Bank,

N.A., 762 F.2d 1303, 1309–10 (5th Cir. 1985) (noting that the issue of whether an unexpired lease

should be assumed or rejected is one of business judgment and the enhancement of the debtor’s

estate); In re Armstrong World Indus., 348 B.R. 136, 162 (D. Del. 2006) (explaining that courts

defer to a debtor’s business judgment to reject a contract under Bankruptcy Code Section 365(a));

In re Federated Dep’t. Stores, Inc., 131 B.R. 808, 811 (S.D. Ohio 1991) (“Courts traditionally

have applied the business judgment standard in determining whether to authorize the rejection of

executory contracts and unexpired leases”).

26. The business judgment standard mandates that a court approve a debtor’s business

decision unless the decision is the product of bad faith, whim or caprice. In re Pisces Energy, 2009

WL 7227880, at *6; In re Pilgrim’s Pride Corp., 403 B.R. 413, 422 (Bankr. N.D. Tex. 2009);

Summit Land Co. v. Allen (In re Summit Land Co.), 13 B.R. 310, 315 (Bankr. D. Utah 1981) (absent

extraordinary circumstances, court approval of a debtor’s decision to assume or reject an executory

contract “should be granted as a matter of course”). If the debtor’s business judgment has been

reasonably exercised, a court should approve the assumption or rejection of an unexpired lease or

executory contract. See, e.g., See Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303,

1309 (5th Cir. 1985); In re Idearc Inc., 423 B.R. 138, 162 (Bankr. N.D. Tex. 2009), aff’d, 662 F.3d


11 10453397v5

315 (5th Cir. 2011) (“In the absence of a showing of bad faith or an abuse of business discretion,

the debtor’s business judgment will not be altered”).

27. Under the business judgment rule, debtors are usually given significant discretion

when requesting to assume or reject an executory contract or unexpired lease. See In re

Continental Airlines Corp., 57 B.R. 845, 851 (Bankr. S.D. Tex. 1985) (stating that, in the absence

of a showing of bad faith or an abuse of business discretion, the debtors’ business judgment will

not be altered). Accordingly, so long as a debtor’s decision is reasonable and in the best interests

of the bankruptcy estate, courts generally defer to the business judgment of the debtor’s

management.

28. Here, the Debtors believe that the assumption of the Engagement Agreements is

well within the Debtors’ business judgment and is in the best interests of their estates. In order to

successfully market, auction and sell the Properties, the Debtors require the assistance of a broker

and auctioneer. In addition, there are no uncured defaults under the Engagement Agreements.

D. Payment of Transaction Fees Out of the Proceeds of the Sales upon Closing is an Exercise of Sound Business Judgment.

29. The Debtors also seek authorization to pay the Transaction Fees out of the proceeds

of the Sales upon closing pursuant to section 363(b) of the Bankruptcy Code. Section 363(b) of

the Bankruptcy Code provides that a debtor, “after notice and a hearing, may use, sell, or lease,

other than in the ordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(1). The

Debtors need only provide a sound business justification for the use of estate property outside the

ordinary course. See Continental Air Lines, 780 F.2d at 1226; Asarco, 650 F.3d at 601; Cowin,

2014 WL 1168714, at *38.

30. The Texas Listing Agreement provides that the Broker may deduct the Texas Sale

Commission from any deposits, payments or other funds, including proceeds of sale, paid by a


12 10453397v5

purchaser of the Texas Property. The Oklahoma Listing Agreement provides that the Broker may

deduct the Oklahoma Sale Commission from any deposits, payments or other funds, including

proceeds of sale, paid by a purchaser of the Oklahoma Property. The Texas Marketing Agreement

provides that Ten-X will receive the Texas Marketing Fees out of the proceeds of sale of the Texas

Property. The Oklahoma Marketing Agreement provides that Ten-X will receive the Oklahoma

Marketing Fees out of the proceeds of sale of the Oklahoma Property.

31. The Debtors believe that the Transaction Fees represent reasonable costs for the

marketing, auction, and sale of the Properties and that the Sales will ultimately enhance the

Debtors’ estates. In addition, if the Engagement Agreements are assumed and the fees are not

paid, this will constitute a postpetition breach of the Engagement Agreements, which may entitle

the Broker and Ten-X to administrative claims for damages. See In re Juvennelliano, 464 B.R.

651, 653–654 (Bankr. D. Del. 2011) (discussing the implications of postpetition breaches of

assumed contracts and holding that post-assumption breach of an assumed lease gives rise to an

administrative expense claim). In order to avoid incurring administrative expense claims for the

nonpayment of the fees, the Debtors seek authorization to pay the Texas Sale Commission and

Texas Marketing Fees upon closing out of the proceeds of the sale of the Texas Property, and the

Debtors seek authorization to pay the Oklahoma Sale Commission and Oklahoma Marketing Fees

upon closing out of the proceeds of the sale of the Oklahoma Property.

WAIVER OF STAY UNDER BANKRUPTCY RULE 6004(h)

32. Bankruptcy Rule 6004(h) provides that “[a]n order authorizing the use, sale, or

lease of property other than cash collateral is stayed until the expiration of 14 days after entry of

the order, unless the court orders otherwise.” FED. R. BANKR. P. 6004(h). As described above, the

relief that the Debtors seek in this Motion is necessary for the Debtors to maximize value for their


13 10453397v5

estates. Accordingly, the Debtors respectfully request that the Court waive the fourteen-day stay

imposed by Bankruptcy Rule 6004(h), as the exigent nature of the relief sought herein justifies

immediate relief.

NOTICE

33. Notice of this Motion will be given to: (a) the U.S. Trustee; (b) Otterbourg P.C.,

counsel for Wells Fargo Bank, NA; (c) Simpson Thatcher & Bartlett, LLP, counsel for FR XIII

Charlie AIV, L.P.; (d) the United States Attorney’s Office for the Southern District of Texas; (e)

the Internal Revenue Service; (f) the United States Securities and Exchange Commission; (g) the

state attorneys general for states in which the Debtors conduct business; and (h) all parties that

have requested or that are required to receive notice pursuant to Rule 2002 of the Bankruptcy

Rules. The Debtors submit that, under the circumstances, no other or further notice is required.

CONCLUSION

34. The Debtors respectfully request that this Court enter an Order (i) approving the

auction and sale the Properties free and clear of all liens, claims, and encumbrances; (ii)

authorizing the Debtors to assume the Engagement Agreements; (iii) authorizing the payment of

the Transaction Fees upon closing and out of the proceeds of the Sales; and (iv) granting such other

and further relief as may be just and proper.


14 10453397v5

Dated: March 17, 2020. Houston, Texas

PORTER HEDGES LLP

By: /s/ Joshua W. WolfshohlJoshua W. Wolfshohl (TX 24038592) Aaron J. Power (TX 24058058) Genevieve M. Graham (TX 24085340) Michael B. Dearman (TX 24116270) 1000 Main Street, 36th Floor Houston, Texas 77002 Telephone: (713) 226-6000 Fax: (713) 226-6248

PROPOSED COUNSEL FOR DEBTORS AND DEBTORS IN POSSESSION


15 10453397v5

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re:

TRI-POINT OIL & GAS PRODUCTION SYSTEMS, LLC, et al.,

Debtors.4

§§§§§§§

Chapter 11

Case No. 20-31777 (DRJ)

(Joint Administration Pending) (Emergency Hearing Requested)

ORDER (I) AUTHORIZING THE SALE OF CERTAIN REAL PROPERTY FREE AND CLEAR OF LIENS, CLAIMS, AND ENCUMBRANCES, (II) AUTHORIZING THE

ASSUMPTION OF CERTAIN ENGAGEMENT AGREEMENTS, (III) AUTHORIZING PAYMENT OF TRANSACTION FEES AT CLOSING, AND

(IV) GRANTING RELATED RELIEF [Relates to Docket No. __]

Upon the motion (the “Motion”)5 of the above-captioned debtors and debtors in possession

(collectively, the “Debtors”) for entry of an order pursuant to Bankruptcy Code sections 363 and

365, Bankruptcy Rules 6004 and 6006, and Bankruptcy Local Rule 9013-1(i) to (i) sell the

Properties free and clear of liens, claims, and encumbrances; (ii) assume the Engagement

Agreements; (iii) pay the Transaction Fees out of the proceeds of the Sales at closing; and (iv) for

related relief. The Court has jurisdiction over the Motion and the relief requested in the Motion

pursuant to 28 U.S.C. § 1334. The Motion is a core proceeding pursuant to 28 U.S.C.

§ 157(b)(2)(A), (N), and (O) and the Court may enter a final order on the Motion. Venue of these

chapter 11 cases and Motion is property in this District and in the Court pursuant to 28 U.S.C. §

4 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are as follows: Tri-Point Oil & Gas Production Systems, LLC (2419); FR Tri-Point, LLC (3967), Tri-Point Services GP, LLC (5463), and Tri-Point Services, LLC (0783). The address of the Debtors’ headquarters is: 5555 San Felipe, Suite 1250, Houston, Texas 77056.

5 All terms not expressly defined herein shall have the meaning ascribed to them in the Motion.

Case 20-31777 Document 19-1 Filed in TXSB on 03/17/20 Page 1 of 16

16 10453397v5

1408. The statutory predicates for relief requested in the Motion are sections 105(a), 328, 363,

and 365 of the Bankruptcy Code and Bankruptcy Rules 6004 and 6006.

The relief requested by the Motion is in the best interests of the Debtors, their estates,

creditors, stakeholders, and other parties in interest and the Debtors gave sufficient and proper

notice of the Motion and related hearings. The sale of the Properties is an exercise of Debtors’

reasonable business judgment. The conditions of section 363(f) of the Bankruptcy Code have been

satisfied in full; therefore, the Debtors may sell the Properties free and clear of all liens, claims,

and encumbrances. The assumption of the Engagement Agreements is also an exercise of the

Debtors’ reasonable business judgment. The requirements of Bankruptcy Code section 365 and

Bankruptcy Rule 6006 have been satisfied with respect to the Engagement Agreements. Upon

consideration of the Motion and after hearing statements in support of the Motion during

proceedings before this Court, the Court finds that good and just cause exists to grant the requested

relief.

IT IS HEREBY ORDERED THAT:

1. The Debtors are authorized to auction and sell the Properties pursuant to the PSAs

attached hereto as Exhibit A.

2. The sale of the Properties shall be free and clear of all liens, claims, encumbrances,

and interests pursuant to 11 U.S.C. § 363(f). Any lien, claim or encumbrance on the Texas

Property shall attach to the proceeds of the sale of the Texas Property. Any lien, claim or

encumbrance on the Oklahoma Property shall attach to the proceeds of the sale of the Oklahoma

Property.

3. Upon the consummation of the Sales, all persons holding any lien, claim, or

encumbrance against or in the Properties of any kind or nature whatsoever, including all taxing


17 10453397v5

authorities, are forever barred, estopped, and permanently enjoined from asserting, prosecuting or

otherwise pursuing such lien, claim, interest or encumbrance against the purchaser of the Texas

Property, the purchaser of the Oklahoma Property or the Properties themselves.

4. All objections to, reservations of rights regarding, or other responses to the Motion

or the relief requested therein or the entry of this Order, that have not been withdrawn, waived, or

settled, or that have not otherwise been resolved pursuant to the terms hereof, are hereby denied

and overruled on the merits with prejudice. Those parties who did not timely object to the Motion

or the entry of this Order, or who withdrew their objections thereto, are deemed to have consented

to the relief granted herein for all purposes, including without limitation, pursuant to section

363(f)(2) of the Bankruptcy Code.

5. Nothing in this Order or the Asset Purchase Agreement releases, nullifies, precludes

or enjoins the enforcement of any police or regulatory liability to a governmental unit that any

entity would be subject to as the post-sale owner or operator of property after the date of entry of

this Order. Nothing in this Order or the PSAs authorizes the transfer or assignment of any

governmental (a) license, (b) permit, (c) registration, (d) authorization, or (e) approval, or the

discontinuation of any obligation thereunder, without compliance with all applicable legal

requirements and approvals under police or regulatory law.

6. The Engagement Agreements are hereby assumed.

7. Notice of the Motion as provided therein shall be deemed good and sufficient notice

of such Motion and the requirements of Bankruptcy Rule 6004(a) and the Bankruptcy Local Rules

are satisfied by such notice.

8. The Debtors are authorized to pay the Oklahoma Sale Commission and Oklahoma

Marketing Fees out of the proceeds of the sale of the Oklahoma Property upon closing of the sale


18 10453397v5

of the Oklahoma Property. The Debtors are authorized to pay the Texas Sale Commission and

Texas Marketing Fees out of the proceeds of the sale of the Texas Property upon closing of the

sale of the Texas Property.

9. Notwithstanding Bankruptcy Rule 6004(h), this Order shall be effective and

enforceable immediately upon entry hereof.

10. The Debtors are authorized and empowered to take all actions necessary to

implement the relief granted in this Order.

11. This Court shall retain jurisdiction with respect to all matters arising from or related

to the implementation or interpretation of this Order.

Dated: _______________, 2020 Houston, Texas

HONORABLE DAVID R. JONES CHIEF UNITED STATES BANKRUPTCY JUDGE


EXHIBIT A


united states bankruptcy court southern district …tri-point oil & gas production systems, llc...

Documents